Natural Justice + Review + Rolls Royce + Reopening + OTSS

DATE: (Date of pronouncement)
DATE: September 17, 2012 (Date of publication)

Hindusthan Tobacco Company vs. CIT (Calcutta High Court) Click here to download the judgement (hindustan_tobacco_natural_justice.pdf)

Plea of natural justice breach/ cross-examination should be raised at the earliest opportunity

The principles of natural justice cannot be construed in isolation from the factual matrix of the case. Though the inspectors’s report was not given to the assessee, the contents thereof were communicated, the identity of the persons question was given and the manner in which the enquiry was held was also set out and the assessee was given a chance to explain. Accordingly, the principles of natural justice were substantially complied with At the assessment stage, the assessee did not feel prejudiced categorically indicated that it had submitted whatever materials were within its possession and did not have anything more to submit. It did not ask for a copy of the report or for cross-examination of the inspector. If a party fails to avail of the opportunity to cross-examine a person at the appropriate stage in the proceeding, the said party would be precluded from raising such issue at a latter stage of the proceeding. Plea of violation of natural justice taken at the appellate stage is an afterthought.

Note: The verdict of the Third Member in DCIT vs. Hindustan Tobacco 87 ITD 129 (Kol) is approved
CIT vs. Maruti Insurance Distribution Services (Delhi High Court) Click here to download the judgement (maruti_254_2_rectification.pdf)

S. 254(2): Tribunal cannot recall its order & substitute by new order

The power to rectify an order u/s 254 (2) is extremely limited. It does not extend to correcting errors of law, or re-appreciating factual findings as that would amount to a review. The amendment of an order does not mean obliteration of the order originally passed and its substitution by a new order. The Tribunal’s order that it had not considered a decision in the assessee’s own case for an earlier year where the facts & circumstances were the same and that this was an “apparant mistake” cannot be sustained.

Contrast with Lachman Dass Bhatia Hingwala 330 ITR 243 (Del) (FB)  & Honda Siel Power Products vs. CIT 295 ITR 466 (SC)
Rolls Royce Singapore Pvt Ltd vs. DCIT (Delhi High Court) Click here to download the judgement (rolls_royce_review_petition.pdf)

Review Petition allowed & judgement recalled on issue of PE & profit attribution

The judgement in Rolls Royce Singapore Pvt Ltd vs. DCIT is recalled to decide the issue whether (a) ANR, which was the agent of the assessee, could be treated as the "permanent establishment: and (b) what would be the reasonable arms’ length price in the hands of ANR/ PE which can be assesssed in India.

See also : The Rolls Royce Case: Spare A Thought For the Much-Maligned AO!
DSJ Communication Ltd vs. DCIT (Bombay High Court) Click here to download the judgement (DSJ_151_approval_JCIT.pdf)

S. 147/151: Approval of the CIT instead of JCIT/Addl. CIT renders reopening void

If the approval of the JCIT/Addl. CIT to the reopening as required by s. 151 was obtained, it is for the department to produce the same. Whether the approval was granted or not is an objective fact which can be established only by producing the approval. Where a statute requires something to be done in a particular manner, it has to be done in that manner. Approval by another authority will not satisfy the requirement (Ghanshyam K. Khabrani & SPL’S Siddhartha followed).

Akay Organics Ltd vs. ITO (Bombay High Court) Click here to download the judgement (remission_of_loan_OTS_interest.pdf)

In a One Time Settlement of principal & interest, it cannot be assumed that assessee has paid the interest due

In a One Time Settlement (OTS) with the lenders, if a split between the principal and interest is not given, it cannot be assumed that the assessee has paid the interest on a pro-rate basis so as to entitle it to deduction

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